What Is the Primary Difference Between Variable and Absorption Costing

question 3

Multiple Choice

What is the primary difference between variable and absorption costing?

• A)inclusion of fixed selling expenses in product costs
• B)inclusion of variable factory overhead in period costs
• C)inclusion of fixed selling expenses in period costs
• D)inclusion of fixed factory overhead in product costs

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Definitions:

Normal Balance

The side of an account that is increased, which for assets, expenses, and dividends is the debit side, and for liabilities, equity, and revenue is the credit side.

Financial Statement

A documented account detailing the commercial operations and fiscal outcomes of an enterprise.

Normal Balance

The usual balance of an account based on its classification in the accounting system, typically debit for assets and expenses, and credit for liabilities, equity, and revenue.

Financial Statement

Formal records of the financial activities and position of a business, person, or other entity.